20 December 2011

10 Cos Benefitting From Rupee Downfall

The steady fall in the value of rupee is not a good sign for India but there are organizations that are benefitting from this. Exports and global acquisitions of Indian companies are on the rise, despite the economic slowdown in India. Financial Analysts say that exports will experience only a short-term gain and might not work well in the long-run. However, there are a few organizations which are benefitting from the depreciation of rupee, which are as follows:

1) ADF Foods:

ADF Foods in an ethnic Indian food company, which specializes in chutneys, pickles, spices, canned food and frozen food. It is an export-oriented organization and it also has its own, special brands. According to Business Standard, ADF Foods witnessed net sales of 52.25 crores in the second quarter of 2011, which is higher than that of last year. Net sales have increased by 42 percent as compared to last year. Experts say that having a strong brand presence is very important to transcend fluctuations in money value. Since, ADF Foods has a good brand name in the market because of its own brands, like – Ashoka, Camel, Aeroplane, Truly Indian, Khansaama and ADF Soul, ADF is doing quite well in the market.

2) Bombay Rayon Fashion:

Bombay Rayon Fashion (BRF) export their products mostly to US and Europe. According to Business Line, the exports of BRF have gone up and a steady rise is seen in its stock value but this growth might get stunted because of increased costs of raw materials, depreciation of rupee and high interest rates. There was a 20 percent growth in the revenues in the quarter ended, June 2011. Still, the company is facing troubles due to the increasing cost of input materials. According to S.P. Tulsian, most textile companies, like BRF, Raymond and Bombay Dying, will experience only marginal increase in revenue due to depreciating value of rupee.

3) Gokaldas Exports:

Gokaldas Exports is a leading organization in readymade garments, based in Bangalore. It has reported net sales of 271.75 crores in the quarter ended September, 2011, thus, indicating an increase of only 2 percent when compared to last year. It, however, reported a loss of 30.12 in the same quarter. This may be because of the fact that the US and European markets are not doing that well. Also, an increase in wages due to the revision in minimum wages, is making the company face losses. Like BRF, this too faces the increased cost of inputs.

4) Lupin:

Lupin is a leading pharmaceuticals company of India and has businesses in mostly the U.S. There was an increase of 24 percent in both its net sales and net profit in the second quarter of 2011. This growth was attributed to good brand name and entering a licensing agreement with Medicis Pharmaceutical Corporation. Lupin also showed a growth of 14 percent in the net sales in Japan (Kyowa Pharmaceuticals) and 61 percent growth in South Africa (Pharma Dynamics), both in the second quarter.

5) Plethico Pharmaceuticals:

Plethico Pharmaceuticals is among the leading global healthcare companies, based in India. Plethico has registered a steady decline in its profits over the last few months. It has reported a net loss of 22.91 crores in the quarter ended September, 2011. It, however, had registered a net gain of 7.62 crores in the quarter ended June, 2011, which is better than last years. The fluctuations in Plethico might be due to managerial changes as President, Rajiv Bedi, and Chief Operating Officer, Hemant Modi, resigned this year. Unlike Lupin, Plethico is not able to derive full benefit of the sliding rupee.

6) Piramal Glass:

Piramal Glass is a leading pharmaceutical and perfume manufacturing company, catering mostly to the U.S. and Sri Lanka. India still provides for more than half of its sales. Piramal Glass registered sales of 197.46 crores and a net profit of 22.23 crores in the quarter ended September, 2011. Managing Director of Piramal Glass, Vijay Shah, said that the U.S. acquisition helped them gain both, better technology and a bigger customer base in the premium segment (Estee Lauder, L’Oreal, Revlon and Elizabeth Arden).

7) Tata Global Beverages:

Tata Global Beverages (TGB) is a wing of the Tata Group and its operations are spread all over the world. TGB has registered a whopping increase of 93.9 percent in its consolidated profit in the year 2011. According to sources, this tremendous increase can be attributed to better sales and lower costs of operations. This growth was mostly due to sales from outside India and hence was not affected much by the depreciating value of rupee.

8) United Phosphorous:

United Phosphorous (UPL) is a Mumbai based crop-protection, seeds and chemical company. The agricultural sector is said to gain prominence in the coming months and hence better growth is expected in this sector. According to Unicon Investment, UPL is expected to register a net profit of 51 percent at 173.2 crores by the end of 2011. However, according to Livemint.com, after acquiring the US-based company, RiceCo, there has been a decline in sales in the month of December, 2011. Still, the market value of UPL is strong right now.

9) Mirza International:

Mirza International in one of the leading leather-based product companies in India. It caters to customers from all over the world. It registered sales of 155.46 crores and a net profit of 11.27 crores in September, 2011. It is also planning to divest in a sister company, Mirza (UK). The Europe crisis does not seem to have much effect on Mirza International but the rupee down-slide might catch up to it.

10) Gitanjali Gems:

The reputed Gitanjali Gems mostly caters to the US in foreign markets. It has various companies under its wing, namely – Gili, Asmi, Nakshatra, Sangini and the like, apart from jewelleries, Gitanjali Gems also manufactures watches. It was also involved in a number of acquisitions of foreign companies in the last few years. It registered net sales of 3167.6 crores, for the quarter ended September, 2011, indicating a 26.2 percent growth over the last year. It also registered a net gain of 132.2 crores in the same quarter. This growth has been contributed to better consumer reaction from Tier II and Tier III cities in India. Brand name is also a strong point of Gitanjali Gems and, hence, the growth.